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Barriers to exit

Updated: Aug 20, 2021

Obstacles that make it costly for a firm to exit a market. Barriers to exit intensify competition in a market because incumbent firms have little choice but to ‘stay and fight’. Examples of barriers to exit include the costs involved with the write-off of assets, redundancy payments, penalties for terminating contracts, and the loss of reputation and goodwill.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.